Choppergate: AgustaWestland sends arbitration notice to govt

NEW DELHI: Faced with the imminent cancellation of its Rs 3,546-crore contract inked in February 2010 to supply 12 VVIP helicopters to IAF, AgustaWestland has sent a notice to the defence ministry asking it to get involved in the arbitration process.

Having invoked arbitration in the case on October 4, with the nomination of former Supreme Court judge B N Srikrishna as the arbitrator from its side, AgustaWestland has warned it will take up the matter at an international forum if the MoD does not nominate its own arbitrator within 30 days.

"AgustaWestland would have the right to approach the President of the International Chamber of Commerce, Paris, for nomination of the arbitrator," said the notice.

The Indian defence procurement procedure (DPP) lays down that any arbitration proceeding has to be held here, with one arbitrator each being nominated by the buyer and seller. The third, who shall not be a citizen of domicile of the country of either of the parties, would be the neutral one.

MoD, however, has so far rejected the plea for arbitration and refused to be drawn into any legal proceedings with the aviation firm. It has held that the firm violated "the pre-contract integrity pact", and the arbitration process did not apply to it.

This comes even as Indian officials are gearing up to question Guido Ralph Haschke, one of the three middlemen who allegedly helped swing the VVIP helicopter deal for AgustaWestland, in an Italian court on December 13.

Haschke, whose statement is being recorded by the Italian court after he was extradited from Switzerland, has claimed 6 million euros were paid to Indian Air Force officials and 8.4 million euros to bureaucrats, with the politicians also getting a cut.

As per reports from Italy, Haschke said there was also a plan to give 7% commission in the case to the three cousins of former IAF chief Air Chief Marshal (ACM) S P Tyagi — Dosca, Julie and Sandeep. He also claimed to have met ACM Tyagi six to seven times.

As reported earlier, even as the CBI probes the criminal case, the MoD is also getting all set to scrap the contract with AgustaWestland after earlier freezing all further payments to the company despite having inducted only three of the 12 AW-101 helicopters, with around 45% of the total contract value already been paid.

The final cancellation process was initiated after MoD received the opinion of the law ministry and the attorney general that there was "a clear violation of the integrity pact and the contractual obligations" by AgustaWestland. The provisions provide for "strict action including the cancellation of contract, recovery of payment, blacklisting and penal action".